Insolvency Practitioners

Many business owners are unsure of how to recognise if their firm is in a state of insolvency and if it is, what to do about it.

If you fall into this category, this article will tell you how to recognise the signs of insolvency and the role that insolvency practitioners take, when a firm reaches this stage.

The warning signs of insolvency

There are three questions you can ask yourself to determine if your business is heading into financial difficulty:

  • Are you experiencing difficulty in paying bills as they fall due?
  • Does your balance sheet show that you have more liabilities than assets?
  • Has a creditor applied for a County Court Judgement against you?

If you have answered “yes” to any of these, there is a distinct possibility that your business is insolvent. You now need to act quickly to prevent the situation from deteriorating any further and from you becoming potentially personally liable for the businesses’ debts. You must contact a licensed firm of insolvency practitioners immediately, to show that you are acting in the best interests of your creditors.

Insolvency practitioners role

An insolvency practitioner will, with your help, produce an Individual Voluntary Agreement (IVA). This is legally binding and simply forms an agreement between you and your creditors, allowing you to make reduced contributions to them, until the debt is paid off in its entirety. Only one creditor needs to vote for the IVA for it to be approved. However, if one creditor votes against it, and they form more than 25% of your outstanding debt, then it will be declined. As long as you keep to the terms of the IVA and make regular contributions as agreed, then the outstanding debt will be completely removed at the end of the given term.

A word of caution – when applying for an IVA, you may be asked to either cash in your endowment on your private residence or release its available capital, in order to fulfil the entire outstanding amount of your business debt.

Once this process has been completed, most insolvency practitioners will apply to the court for an Interim Order. This is put in place to protect you, and prevent your creditors from taking any further legal action against you.

Insolvency practitioners UK will work alongside you throughout the duration of your payment period, ensuring that your financial situation is stable and you are making payments as agreed. You will make the payments to them and they will in turn distribute monies among your creditors on a pro-rata basis, in accordance with the terms of the IVA.

At the end of the IVA period, provided all payments have been met, any outstanding balances will be written off.

Insolvency practitioners act on behalf of their clients whilst the IVA is being drawn up and then on behalf of the creditors during the rest of the term of the IVA, supervising payments and making sure the terms of the agreement are being met.

How Touch can help find insolvency practitioners

Touch Financial, a leading commercial finance and business turnaround, has helped many businesses onto the path of recovery, without having to resort to insolvency practitioners and IVAs.

We may be able to advise on how to reduce your business running costs, release some of the capital tied up in your assets or outstanding debts or, using our panel of carefully selected lenders, secure further funding for your firm. Call us on 0845 3889725 or complete one of our online quote forms.

Our trained experts have decades of experience in helping businesses such as yours through tough times and financial pressures. We will work with you in examining the facts, outlining the available options and providing a bespoke solution for your individual difficulties.

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